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18 May 2001. AUSTRALIAN SPIN

- GST, THE FEDERAL ELECTION & PORK BARRELS -

Radio 2UE's John Laws (Lawsey) is the Rush Limbough of Australia. His latest bonnet bee (or is that little bird) mentioned that the government is planning to compensate self funded retirees for the GST (Goods & Services Tax) by tax reductions or rebates.

Back before the last election.....

It was promised that the GST would exterminate the black economy, now we are told it didn't.

In 1999 we were told that the new tax system was necessary because the old tax system was "broken", but the old tax system had a $2 billion deficit in 1998, a $4.2 billion surplus in 1999 and a $12.7 billion surplus (~3% of GDP) in 2000.

The new tax system has caused a lot of churn. The extra money collected (just hear all the small businesses complain about the paperwork) is to be given back to those self funded retirees & welfare recipients who now seem, according to the government, to have been the principal contributors to the government's swollen coffers. Workers have already had tax cuts (which were probably due anyhow since there was a $12.7 billion surplus.)

Aren't we getting a little bit circular here? Why not just cancel the GST? and run the government at a loss, and rely on booming business to generate enough taxes to eventually cover the deficit? It worked for Reagan. It worked for Bush. Why wouldn't it work for Australia? Why did Howard need the GST?

SPIN speculates that Australia got the GST because JH had a macho thing about previous leader John Hewson. JH probably overheard someone make a comment along the line "Hewson was the better man, he failed because he tried the impossible ~ to introduced a GST to the Australian people" ~ and the rest is history.

Maybe John Howard is just acting in character as a politician. Chinese peasant author Gao Qiwei recently wrote: The government's appetite for taxes is a bottomless pit, Even if we had a gold mountain and a silver mountain, it would not be enough". Which demonstrates that the average Australian probably has more in common with the average Chinese than he does with the average Australian politician.

On 3 March SPIN was of the opinion that for John Howard to win the late 2001 - early 2002 election:

"There are at least two other things that must be done.

The GST must be repealed. A face saver, but it must come off small business. Perhaps restore a modified Wholesale Sales Tax.
Pauline. I do not know what formula will work, but she must come in from the cold. (Perhaps rehabilitate her with a treaty?)"

Opposition leader Kim Beazley is still carrying the dead wood (saying "sorry", jenny george & gang, etc.) that the voters didn't want last time, and we still do not want it. And Kim Beazley is only offering a "rollback" of the GST, which Howard has already de facto given. So JH found another path & although we are still not happy, condition (1) is revoked. To beat Beazley, the Howard government no longer need repeal the GST.

However the wild card is still Pauline Hanson. If she nominated repeal of the GST as the price of support in forming government, and kept her mouth shut otherwise, (maybe mention CIR) she would most certainly make strong gains, she might even obtain the balance of power in the Representatives & the Senate.

Pauline is John's biggest problem. She is a "ghost" in that the polls do not predict the votes that she will gain. The electorate is watching with bated breath to discover whether Pauline will opt for repeal, and if so, to discover how John Howard would handle that challenge.

SPIN ARCHIVES.

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